Posts

Showing posts with the label union budget

Decision Making as Output and Bounded Rationality

-
  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra
Post a Comment
Read more

Reading the Union Budget: A Primer

-
  The Union Budget is without doubt, the most important document the government presents in the Parliament each year. The reasons are not too far to seek. It is the statement that expresses the government’s plan to spend on various activities as also the government’s measures to raise the revenues from the various sources to meet its expenditure. Therefore, an analysis of the budget is always going to be of critical import. The Finance Minister’s speech comprises two parts. The Part A of the speech focuses on expenditure as also on the policy intent of the government. It is in Part A that the government announces its economic policy for the year. The issues of privatization, nationalisation, expenditure on populist schemes, allocations for various social sector activities, industrial policy, disinvestment etc. all get highlighted in Part A. Part B is about the tax proposals. It has perhaps lost some attractiveness following the GST which meant that indirect taxes by and large come unde
Post a Comment
Read more

Consumption-Investment Dynamics and the Budget

-
  The Union Budget for the financial year 2021-22 is to be presented to Parliament in less than a month from now. The focus would be on the stimulus the government would give to different sectors as they seek to recover from the lockdown induced by the Chinese pandemic. The focus of the government in 2020 would have to be ensure the firms and households remain solvent during the pandemic lockdown but as the vaccinations are underway, there would be direction necessitated for revival of the economy. The economy must shed the past and look towards the future. An important indicator would be however the boost to the consumption. The economic revival in India has to pick either through a growth in consumption or growth in investment. The government expenditure has ensured the economy remains stable in turbulent times and has saved further blushes for the economy. it is time to revive the other components of aggregate demand.   Investment is sought to be increased through Atmanirbhar pr
Post a Comment
Read more

Union Budget 2020-21: Truth, Perception and Impressions

-
Budget 2020-21 apparently has belied many expectations. Given the projected arc of the economy, anticipation abounded on the prospective display of economic fireworks infusing animal spirits in the economy. To a few experts, there was a 2/3 probability of few major reforms being announced.   The seemingly abrupt end of a marathon speech thanks to Nirmala Sitaraman retiring hurt, left many apparently wondering about the objective of the marathon. Given its inability to go in for radical structural reforms, perhaps, there was very little to discern rather than entering Guinness Book of Records   for the longest budget speech in history. She had all the opportunity in the world to go in for some massive announcements. There are no major elections on the anvil. The FDI is at record levels. Political omerta codes are undergoing creative destruction. There are signs of economics Schumpeterianism on the skyline. Global headwinds are causing turbulences in economic growth. There was no
Post a Comment
Read more